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Utah oil shale could produce petroleum by end of decade

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Petroleum could begin flowing from oil shale in Utah as early as 2019, according to the Estonian company that purchased the only federal oil shale lease in the state.

The company plans to produce “high-quality synthetic oil, which would be acceptable to refineries, such as those in the Salt Lake City area, for example,” Enefit Chief Executive Officer Sandor Liive said in a statement to The Daily Sentinel.

The purchase of Oil Shale Exploration Co. by Enefit, known as Eesti Energia in Estonia, was approved this month by the Committee on Foreign Investment in the United States.

“We do not see surface-processing technologies, such as the Enefit technology, and in-situ technologies, such as those being tested in Colorado, as competing,” Liive said in reply to a series of questions posed via email by The Sentinel.

Shell Oil is working on three research-and-development leases in northwest Colorado. Red Leaf Resources also is testing a method of heating oil shale to release a petroleum-like substance in Utah on private and state land.

Chevron and American Shale Oil LLC also hold one research-and-development lease apiece on federal lands in Colorado.

The equivalent of as many as 3 trillion barrels of crude oil is trapped in the Green River formation of Colorado, Utah and Wyoming.

Water supplies are not the issue in Estonia that they are in the arid American West, and modifications will be needed for the Utah shale, Liive said. Enefit’s oil shale operations in Utah, as well as in Jordan, will focus on minimizing water use, Liive said.

Water isn’t needed for the production process, but it is for mining, cooling and dust control, he said. A realistic, general guideline for surface processes is in the range of one to three barrels of water per barrel of oil produced, Liive said.

“We will strive to push down this range, but it is a bit early to give the exact figure,” he said.

Utah’s business climate figured significantly in Enefit’s decision to buy Oil Shale Exploration and its holdings, Liive said. Terms of the transaction have not been released.

In looking at new rules being considered by Interior Secretary Ken Salazar, the federal government should take into account the “significant up-front investment costs and the amount and cost of processing that is required to go from oil shale rock to a synthetic oil,” Liive said. “The investment profile and size as well as the processing steps and associated costs needed to produce a refinery-ready oil from oil shale are very different from conventional oil.”

Royalty rates should take those differences into account, Liive said, noting the industry will have difficulty justifying those investments “without being willing to fix the requirements and costs.”

Enefit also took into account Utah’s “positive business climate” in deciding to move ahead with the purchase, Liive said.

Enefit has said it plans to build an oil shale plant to produce 57,000 barrels of shale oil per day at full production. The company has been in commercial production in Estonia since the 1980s, producing nearly 1.3 million barrels of shale oil per year from a surface retort.

Enefit’s 160-acre research-and-development lease on federal land in Utah includes the White River shale mine and is included within 30,634 contiguous acres in the Uinta Basin estimated to contain the equivalent of 2.1 billion barrels of oil.